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Feeder cattle review: Prime time for the stocker market

Compared to last week, feedlot bound feeder cattle (weighing over 750 lbs) sold unevenly steady with slight gains in the farmer-feeder regions of the Northern Plains and slight losses on heavy-weight feeders near the commercial feedlot dominated Southern Plains.

Yearling price levels have reached the point that cattle feeders need more time (with cost-of-gains mostly under 1.00/lb) to cheapen feeders into a profit. Feedlots would like to purchase lighter-weight feeders, but competition from grazers has eliminated this option as summer grass pasture can offer cost-of-gains well under .50/lb.

Stocker cattle and calves sold 2.00-6.00 higher than last week’s lighter weather interrupted run with the full advance noted in the Southeastern calf markets where orders poured-in as mild weather has finally reached the major grazing regions.

It is currently prime time for the stocker market during the narrow window between the end of wintry weather and the beginning of spring planting in the major cattle production areas, soon to be followed by the first cutting of hay. Summer grazers have thrown caution to the high winds as they try to fill their needs early enough to get their stockers assembled and straightened out before turn- out dates and before offerings completely dry up.

At the Winter Livestock Auction in Dodge City, KS, a string of 101 head of fully backgrounded 408 lb stocker heifers lit-up the scoreboard at 250.00. Many backgrounders are facing the realization that they are going to run out of money before their pastures are filled, with stocker cattle roughly 25 percent higher than last year.

Cattle growers may be afforded a rare opportunity to lease pastures in the major grazing areas (like the Flint Hills of Kansas) as grazers start to scale-back the number of head they turn-out, either by a lack of capital or a lack of nerve.

Bullish signals continue to lead the way in the livestock arena with every level of beef product at all-time highs and pork cut-outs now perched on historic levels from the challenges pork producers are facing with Porcine Epidemic Diarrhea Virus (PEDv).

The air is indeed getting thin at the current market elevation, but summer contracts on the CME Feeder Cattle board and out- front cash sales of yearlings continue to trade at a slight premium to the spot cash market. Fed cattle sold steady to 2.00 higher this past week from 148.00- 152.00 live and steady to 3.00 higher dressed at mostly 240.00.